Janet Yellen sets June 5 as X-Date in US debt-ceiling standoff


WASHINGTON: Secretary of the Treasury Janet Yellen She said her department expects to run out of funds by June 5 if lawmakers fail to raise or suspend the US debt ceiling.
“Based on the most recent data available, we now believe that unless Congress raises or suspends the debt limit by June 5, the Treasury Department will not have sufficient resources to meet the government’s commitments,” Yellen said Friday in her recent letter to lawmakers about the possibility of sovereign default timing.
The chief financial officer said her department could make more than $130 billion in planned payments in the first two days of June, including to veterans, Social Security beneficiaries and health insurance beneficiaries.
“These payments will bring extremely little resources to the treasury,” she said.
The new forecast significantly limits the previous range that the Ministry of Finance had given for a possible default to one day.
Earlier on Monday, Yellen said her department could run out of funds as early as June 1 and that “very likely” all resources would be exhausted “early June.”
Now, Yellen says the Treasury Department can hold out until Friday June 2 but is unlikely to complete all of its commitments by Monday June 5.
Demand from premium investors to hold US papers, which face the greatest risk of default if Congress and the White House fail to reach an agreement, fell further on Friday, with yields slipping below 6%.
The latest letter comes as White House negotiators and Republican lawmakers are moving closer to an agreement on the budget. Republicans have vowed not to raise the country’s legal borrowing limit unless Biden agrees to budget cuts.
The Treasury effectively hit debt ceiling in January and has since deployed emergency accounting measures to avert a default that could prove catastrophic for financial markets and the economy.
The Treasury Department’s treasury on hand fell to $38.8 billion on Thursday, the lowest since 2017, according to data released Friday to keep paying the government’s bills, the ministry said in a statement Friday.
The remaining emergency funds are the remainder of the $335 billion in total approved measures that were available to keep the U.S. government from running out of borrowing space under the statutory debt limit and are up from around Down $92 billion on May 17.

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